38. ______ bias arises when the returns of unsuccessful funds are left out of the sample. A.SurvivorshipB. BackfillC. OmissionD. IncubationE. none of the aboveSurvivorship bias arises when the returns of unsuccessful funds are left out of the sample.Difficulty: Moderate39. Performance evaluation of hedge funds is complicated by ______. Performance evaluation of hedge funds is complicated by liquidity premiums, survivorship bias, unreliable market valuations of infrequently traded assets, and unstable risk attributes.Difficulty: Moderate40. Lo (2201) examined up and down betas of hedge funds and concluded that up market betas were ______ down market betas. Lo (2201) examined up and down betas of hedge funds and concluded that up market betas were generally smaller than down market betas.Difficulty: Difficult26-18

This preview
has intentionally blurred sections.
Sign up to view the full version.

Chapter 26 - Hedge Funds41. The typical hedge fund fee structure is The typical hedge fund fee structure is a management fee of 1% to 2% and annual incentive fee equal to 20% of investment profits beyond a stipulated benchmark performance.Difficulty: Moderate42. Hedge fund incentive fees are essentially A. put options on the portfolio with a strike price equal to the current portfolio valueB. put options on the portfolio with a strike price equal to the expected future portfolio valueC. call options on the portfolio with a strike price equal to the expected future portfolio valueD.call options on the portfolio with a strike price equal to the current portfolio valueE. straddlesHedge fund incentive fees are essentially call options on the portfolio with a strike price equalto the current portfolio value.Difficulty: Moderate43. Regarding hedge fund incentive fees, hedge fund managers ______ if the portfolio return is very large and ______ if the portfolio return is negative. Regarding hedge fund incentive fees, hedge fund managers get the fee if the portfolio return isvery large and lose nothing except the incentive fee if the portfolio return is negative.Difficulty: Moderate26-19

Chapter 26 - Hedge Funds26-20

This preview
has intentionally blurred sections.
Sign up to view the full version.

What students are saying

As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran
Temple University Fox School of Business ‘17, Course Hero Intern

I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana
University of Pennsylvania ‘17, Course Hero Intern

The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.